U.K. developers will begin 10.5 billion pounds ($17.9 billion) of housing developments this year, a 14 percent rise from 2013, as government efforts to stimulate homebuying boost demand, according to a report by construction-data provider Glenigan.
Total construction will rise this year and next as the Help-to-Buy loan program introduced in March 2013 makes first-time purchases easier, Glenigan said in a report. Output during the first four months of 2014 climbed 6.2 percent from a year earlier to 38.7 billion pounds.
The Help-to-Buy mortgage guarantee enables buyers to purchase both newly built and existing homes costing as much as 600,000 pounds with a down payment as low as 5 percent. Economists, Prime Minister David Cameron’s Liberal Democrat coalition partners and former Chancellor of the Exchequer Nigel Lawson are among those urging current Conservative Party Chancellor George Osborne to restrict the program because it risks creating a housing bubble.
“The Help-to-Buy scheme is building more confidence and helping people to get into the market,” Allan Wilen, economics director at Glenigan, said by phone. “That pick up in the wider housing market is feeding through into increasing supply which is something the government is trying to prioritize.”
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